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Mapletree Commercial Trust’s Latest Earnings: Distribution Remains Unchanged

Mapletree Commercial Trust  (SGX: N2IU) released its fiscal third-quarter earnings report yesterday evening. The reporting period was from 1 October 2016 to 31 December 2015.

Mapletree Commercial Trust is a Singapore focused real estate investment trust (REIT). At the local front, the REIT has ownership of Singapore’s largest mall, VivoCity as well as the PSA buildingBank of America Merrill Lynch HarbourFront (MLHF) and Mapletree Anson.

You can learn more about the REIT in here and here. You can also catch up with the results from the REIT’s previous quarter here.

Financial highlights

The following’s a quick view on the latest financial figures from Mapletree Commercial Trust:

  1. Gross revenue was $73.8 million in the reporting quarter, inching up 1.2% from the same quarter a year ago.
  2. Net property income (NPI) rose by a healthier 3.5% to $56.6 million when compared to the $54.7 million seen in the same quarter a year ago. Management credited this with its focus on cost controls which resulted in a 5.5% decline in property operating expenses.
  3. Distribution per unit (DPU) for the reporting quarter was 2.08 cents, unchanged from a year ago.
  4. The value of the REIT’s investment properties was $4.2 billion as of 31 March 2015. The REIT had a net asset value per unit of $1.24, up 6% from a year ago.

Beyond these, Foolish investors might want to keep an eye on the REIT’s debt profile. The debt profile may provide clues on how the REIT is funded and its sensitivity to the interest rate environment. These are summarised for Mapletree Commercial Trust below:

2016-01-27 Mapletree Commercial Trust Debt Table
Source: Mapletree Commercial Trust’s earnings presentation

For the reporting quarter, there were a few changes to the debt-profile. The average weighted debt to maturity for the REIT had rose to 3.6 years while its gearing ratio dipped to 36.3%; these are positive changes. But, the interest cover ratio had dipped slightly from 5.5 times to 5.1 and the weighted average all-in interest cost of debt had increased to 2.47%.

The REIT has little outstanding debt in the fiscal year ending 31 March 2016 (FY15/16). The next refinancing hurdle will be the $354 million in bank debt which becomes due in in the following fiscal year.

Operational highlights

Portfolio occupancy for Mapletree Commercial Trust improved compared to the previous quarter. The portfolio occupancy was 98.4%, higher than the 96.6% recorded in the previous quarter. Majority of the improvement came from Mapletree Anson which increased its occupancy from 87.5% to 99.3%. The REIT also reported a weighted average lease term to expiry of about 2.3 years.

On the flipside, year-to-date shopper traffic at VivoCity had slipped by 1.9% from a year ago. That said, tenant sales managed to climb by 2.5% over the same period. These are trends worth keeping an eye on.

An asset enhancement initiative (AEI) for VivoCity is also planned for the next quarter. Mapletree Commercial Trust expects to spend $6.1 million in capital expenditure with a target completion by the end of the first half of FY16/17.

Summing up the quarter, Sharon Lim, the chief executive of the manager for Mapletree Commercial Trust, had this to add:

“We are pleased to continue to deliver stable returns for the third quarter of FY15/16 with a DPU of 2.08 cents. In an environment of rising headwinds in both the retail and office sectors, our focus on active asset management and cost management have yielded good results.

Third quarter’s gross portfolio revenue grew 1.2% and we achieved 5.5% savings in operating expenses. On a year-on-year basis, NPI rose 3.5%. We have also secured bilateral term loan facilities of S$190 million in January 2016, and will be using this to refinance existing debts due in 2016 and 2017.

VivoCity’s robust performance is particularly noteworthy. Its year-to-date tenant sales and NPI grew 2.5% and 8.1% respectively against the same period last year, reflecting its resilience and attractiveness as the largest destination mall in Singapore. To further enhance VivoCity’s appeal to shoppers, we are planning an asset enhancement initiative to strengthen the mall’s F&B offerings. The AEI is expected to commence in 4Q FY15/16 and will complete progressively in 1H FY16/17.”

Foolish summary

Mapletree Commercial Trust last traded at $1.32 yesterday. This translates to a historical price-to-book ratio of 1.06 and a trailing distribution yield of around 6.1%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.